• The TUGBBS forums are completely free and open to the public and exist as the absolute best place for owners to get help and advice about their timeshares for more than 30 years!

    Join Tens of Thousands of other Owners just like you here to get any and all Timeshare questions answered 24 hours a day!
  • TUG started 30 years ago in October 1993 as a group of regular Timeshare owners just like you!

    Read about our 30th anniversary: Happy 30th Birthday TUG!
  • TUG has a YouTube Channel to produce weekly short informative videos on popular Timeshare topics!

    Free memberships for every 50 subscribers!

    Visit TUG on Youtube!
  • TUG has now saved timeshare owners more than $21,000,000 dollars just by finding us in time to rescind a new Timeshare purchase! A truly incredible milestone!

    Read more here: TUG saves owners more than $21 Million dollars
  • Sign up to get the TUG Newsletter for free!

    60,000+ subscribing owners! A weekly recap of the best Timeshare resort reviews and the most popular topics discussed by owners!
  • Our official "end my sales presentation early" T-shirts are available again! Also come with the option for a free membership extension with purchase to offset the cost!

    All T-shirt options here!
  • A few of the most common links here on the forums for newbies and guests!

This is Social Security's Magic Number

MULTIZ321

TUG Member
Joined
Jun 6, 2005
Messages
31,606
Reaction score
9,124
Points
1,048
Location
FT. LAUDERDALE, FL
Resorts Owned
BLUEWATER BY SPINNAKER HHI
ROYAL HOLIDAY CLUB RHC (POINTS)
This is Social Security's Magic Number - by Philip Moeller/ Retirement/ Social Security/ Money/ Time.com

"You probably know you get a bump in monthly Social Security income for each year you delay benefits between ages 62 and 70.

What you may not be aware of: all the goodies you can get on one birthday in that stretch—your 66th, which Social Security defines for now as “full retirement age” (FRA)..."

150922_ret_ssmagicnumber.jpg

Shutterstock

I know there is another ongoing thread about Social Security issues. I decided to keep this separate because the underlying rules are important to understand, even if they are confusing and you certainly don't want to make a costly mistake.

Richard
 

puppymommo

TUG Member
Joined
Apr 1, 2006
Messages
1,182
Reaction score
151
Points
273
This is probably a stupid question, but...

Does anyone know what happens if you retire at say age 62 and don't take social security until your FRA?

I have a pension that I can draw from and probably live on until 66 or maybe even 70. Will my benefit amount increase even though I am no longer paying into SS?
 

vacationtime1

TUG Review Crew: Veteran
TUG Member
Joined
Sep 7, 2006
Messages
5,233
Reaction score
2,838
Points
649
Location
San Francisco
Resorts Owned
WKORV-OF (Maui)
WKV x2 (Scottsdale)
This is probably a stupid question, but...

Does anyone know what happens if you retire at say age 62 and don't take social security until your FRA?

I have a pension that I can draw from and probably live on until 66 or maybe even 70. Will my benefit amount increase even though I am no longer paying into SS?

The short answer is yes.

Your benefit amount will not be subject to a discount for calling for your benefits early. For example, the pension that would pay you $1,000/month at age 66 will get you only $750/month at age 62.
 

Passepartout

TUG Review Crew: Veteran
TUG Member
Joined
Feb 10, 2007
Messages
28,667
Reaction score
17,514
Points
1,299
Location
Twin Falls, Eye-Duh-Hoe
This is probably a stupid question, but...

Does anyone know what happens if you retire at say age 62 and don't take social security until your FRA?

No stupid question at all. Your monthly stipend will increase with every month you delay collecting it until age 70.
 

PigsDad

TUG Member
Joined
Nov 1, 2006
Messages
10,118
Reaction score
7,153
Points
898
Location
Colorado and SW Florida
Resorts Owned
HGVC Elite: SeaWorld, Surf Club, Charter Club, Valdoro
On a related train of thought, what affect does retiring early have on your SS benefit? For example, if I retired at 55 (stopped earning a salary, stopped paying into SS), how would that affect my benefit compared to working until 60? In either case, not taking my SS benefit until my FRA of 67.

Is there any guideline on how not working the last 5 or 10 years before FRA would affect your SS benefit amount?

Kurt
 

Elan

TUG Member
Joined
Jun 6, 2005
Messages
4,459
Reaction score
424
Points
468
Location
Idaho
On a related train of thought, what affect does retiring early have on your SS benefit? For example, if I retired at 55 (stopped earning a salary, stopped paying into SS), how would that affect my benefit compared to working until 60? In either case, not taking my SS benefit until my FRA of 67.

Is there any guideline on how not working the last 5 or 10 years before FRA would affect your SS benefit amount?

Kurt

I'm no expert, but your benefit is based on an average of your top 35 earnings years, IIRC. So if you don't have 35 years in, you'll get a zero in earnings for each deficient year. Someone correct me if I'm wrong.

ETA; I think it's a monthly average, so you might not get a zero for partial years. At any rate, for most people, counting the early earning years instead of the later earning years could be painful
 
Last edited:

Blues

TUG Review Crew
TUG Member
Joined
Jun 6, 2005
Messages
2,495
Reaction score
506
Points
473
Location
Monterey County CA
Is there any guideline on how not working the last 5 or 10 years before FRA would affect your SS benefit amount?

http://www.socialsecurity.gov/pubs/EN-05-10070.pdf

This is the best, most detailed explanation of how your PIA (Primary Insurance Amount) is calculated. Look in particular at Step 5 a/b/c on page 2. Once you've figured your AIME (Average Indexed Monthly Earnings), the benefit uses graduated brackets, kinda like your income taxes in reverse.

For the first $826 of AIME, you get 90%
Then, up to $4980 of AIME, you get 32%
Above $4980 of AIME, you get 15%
(All brackets for 2015. They're inflation indexed for the future)

So, it all depends on whether you're a high earner or not. Yes, it's true that you average 35 years of earnings, so stopping before that time reduces your AIME. But I'll claim that if you're a high enough earner that you exceed $4980 despite averaging in those zeroes, then your increase in benefit from continuing to work is too small to be a concern. Make your decision based on other factors.

HTH,
Bob
 
Last edited:

Blues

TUG Review Crew
TUG Member
Joined
Jun 6, 2005
Messages
2,495
Reaction score
506
Points
473
Location
Monterey County CA
Another way to look at it is like this (I once did this calculation for a retirement web site). Once you have enough AIME to be in the 15% bracket:

If you earn an additional $1000, you and your employer will pay a total of $153 in extra FICA/Medicare tax.

For that, your monthly SS retirement check will increase by slightly less than 36 cents.

Bob
 

geekette

Guest
Joined
Jun 6, 2005
Messages
10,777
Reaction score
5,531
Points
848
One can quit work and not claim SS and nothing really happens except it waits for you, getting bigger.

A few years back, I went the other direction, playing what if my salary is suddenly 10x current for the next 10 years of work? Eh, little difference. I have a full record and so am to the point where lowest years drop off. Doesn't seem to matter much.

So I therefore think that if you have a full record, don't worry about sloughing off a few years, it's not going to make enough difference to fret over it. in fact I do plan to exit work a few or a dozen years before claiming SS.
 

winger

TUG Member
Joined
Oct 7, 2006
Messages
3,840
Reaction score
363
Points
468
Location
Northern California
I've recently gone to a condensed, primer/introductory session on different aspects of retirement. First, it was a very mind boggling experience given the amount of things to consider. Distribution (example SS) was one of the major items/sections covered . One big takeaway I got about this section was order in which you take distributions (e.g. pension, SS, IRA, 401k) in combination with other income sources (e.g. savings, rental income, etc.) could impact the amount of taxes you pay. I will need more education in taxation strategies.
 

John Cummings

TUG Lifetime Member
Joined
Jun 6, 2005
Messages
5,020
Reaction score
80
Points
433
Location
Murrieta, California
Another way to look at it is like this (I once did this calculation for a retirement web site). Once you have enough AIME to be in the 15% bracket:

If you earn an additional $1000, you and your employer will pay a total of $153 in extra FICA/Medicare tax.

For that, your monthly SS retirement check will increase by slightly less than 36 cents.

Bob

I started collecting SS at my FRA. I worked one more year after I started collecting. They increased my SS monthly payment because of the extra year I worked and I was always a high income earner. So I would expect that retiring at 55 would reduce your payment considerably.
 

VacationForever

TUG Review Crew
TUG Member
Joined
Dec 5, 2010
Messages
16,504
Reaction score
11,138
Points
1,048
Location
Somewhere Out There
I've recently gone to a condensed, primer/introductory session on different aspects of retirement. First, it was a very mind boggling experience given the amount of things to consider. Distribution (example SS) was one of the major items/sections covered . One big takeaway I got about this section was order in which you take distributions (e.g. pension, SS, IRA, 401k) in combination with other income sources (e.g. savings, rental income, etc.) could impact the amount of taxes you pay. I will need more education in taxation strategies.

Moving out of CA will help with taxes too...:p
 

John Cummings

TUG Lifetime Member
Joined
Jun 6, 2005
Messages
5,020
Reaction score
80
Points
433
Location
Murrieta, California
Moving out of CA will help with taxes too...:p

That is not necessarily true. I have a pretty high retirement income and don't pay very much in California. I checked into moving to Texas and discovered that my taxes would be much higher because of their high property tax which far exceeded my state income tax here. Social Security is 100% exempt from California state income tax.
 

WinniWoman

TUG Review Crew: Veteran
TUG Member
Joined
Jul 16, 2010
Messages
10,962
Reaction score
7,213
Points
749
Location
The Weirs, New Hampshire
Resorts Owned
Innseason Pollard Brook
That is not necessarily true. I have a pretty high retirement income and don't pay very much in California. I checked into moving to Texas and discovered that my taxes would be much higher because of their high property tax which far exceeded my state income tax here. Social Security is 100% exempt from California state income tax.[/QUOTE

This can be very true in a lot of instances. We are talking about this now- still have many years to go- but planning. We want to move to NH- but I love Vermont more- and we live in NY. There is so much to consider. On the face of it- NH is better because of no income and no sales tax. No taxes on SS. Property taxes are high- but not as high as NY. Cost of housing, though, is high unless you move to the boon docks. But our son lives there. We joined the Free State Project as well committing to move there at some point because of the politics.

Vermont's housing is less, taxes high, but not like NY, but it taxes SS. It also taxes estates. Not good with a lot of the politics, but very good with a certain other law there.

NY does not tax SS or estates in our $$ category. NY property and school taxes are outrageous. Income taxes are high. Housing is outrageous in many areas, but in our area our home values have plummeted. Hate the politics.

What to do, what to do....I think I am leaning on moving to Vermont anyway, if we can ever sell our home. Don't know...Still have 6 years to think about it.:shrug:
 
Last edited:

tashamen

TUG Review Crew: Expert
TUG Member
Joined
Jun 9, 2005
Messages
3,337
Reaction score
76
Points
433
Location
VT
Resorts Owned
Embarc points (former Club Intrawest), Trapp Family Lodge
Vermont's housing is less, taxes high, but not like NY, but it taxes SS. It also taxes estates.[/QUOTE]

This is why we're moving out of VT as soon as we retire, as much as we love it for other reasons. Our property taxes are super high, and I even have to pay VT income tax on my salary from my job in NH (which has no income tax). For various reasons we can't move to NH right now (nor will we when we retire).

For us, moving abroad is a realistic option in retirement, and is looking better every day.
 

WinniWoman

TUG Review Crew: Veteran
TUG Member
Joined
Jul 16, 2010
Messages
10,962
Reaction score
7,213
Points
749
Location
The Weirs, New Hampshire
Resorts Owned
Innseason Pollard Brook
Vermont's housing is less, taxes high, but not like NY, but it taxes SS. It also taxes estates.

"This is why we're moving out of VT as soon as we retire, as much as we love it for other reasons. Our property taxes are super high, and I even have to pay VT income tax on my salary from my job in NH (which has no income tax). For various reasons we can't move to NH right now (nor will we when we retire).

For us, moving abroad is a realistic option in retirement, and is looking better every day."[/QUOTE]



I don't know what you pay, but from what we have seen, Vermont property/school taxes are half what they are in NY for the type of house/property we have. To us that is a good thing, but certainly not as good as, let's say, Delaware, where property taxes can be under $1000, plus no income or sales tax. But don't think I would like Delaware. Don't like that Vermont taxes SS and estates.

Same in NY as far as taxes- people who work in NJ have to pay NY taxes. Or people who live in PA, for ex, and work in NY have to pay NY taxes. We don't have that issue at least.

Overseas not for us. I could maybe try it for a year- but even then, I like Scotland and that is no bargain. LOL! But hubby couldn't anyway and I don't want to be far from our son, so that's out.

Well, we still have the NH option!

I guess there is no Utopia.
 
Last edited:

VacationForever

TUG Review Crew
TUG Member
Joined
Dec 5, 2010
Messages
16,504
Reaction score
11,138
Points
1,048
Location
Somewhere Out There
That is not necessarily true. I have a pretty high retirement income and don't pay very much in California. I checked into moving to Texas and discovered that my taxes would be much higher because of their high property tax which far exceeded my state income tax here. Social Security is 100% exempt from California state income tax.

When someone tells me that he/she has pretty high retirement income, I normally ballpark it as $200K+ per year. At 200K, say 70K comes from SS for a couple, the rest are made up of pension (lucky devils)/IRA distribution/non IRA capital gains (taxed as income in CA), we are looking at 130K and at about 10% income tax in CA, it will be about 13K per year.

Where my CA home is right now, while property tax is only 1%, there is another 1% from mello roos and every year there seems to be additional bonds added to it.

We bought another home in Henderson NV with plans of retiring there and while it is only slightly cheaper than our CA home, the property tax is a quarter of that of our CA home.
 
Last edited:

tashamen

TUG Review Crew: Expert
TUG Member
Joined
Jun 9, 2005
Messages
3,337
Reaction score
76
Points
433
Location
VT
Resorts Owned
Embarc points (former Club Intrawest), Trapp Family Lodge
I don't know what you pay, but from what we have seen, Vermont property/school taxes are half what they are in NY for the type of house/property we have. .[/QUOTE]

Of course the rates differ widely in NY as well as in VT. Just for kicks I looked up houses in Pine Bush on realtor.com, and there were several houses close to what my house is currently valued at. The property taxes on them were about $500 per year higher than what I pay in VT, so nowhere near twice as much.

I'm just pointing out that averages can be misleading - no offense intended.
 

John Cummings

TUG Lifetime Member
Joined
Jun 6, 2005
Messages
5,020
Reaction score
80
Points
433
Location
Murrieta, California
When someone tells me that he/she has pretty high retirement income, I normally ballpark it as $200K+ per year. At 200K, say 70K comes from SS for a couple, the rest are made up of pension (lucky devils)/IRA distribution/non IRA capital gains (taxed as income in CA), we are looking at 130K and at about 10% income tax in CA, it will be about 13K per year.

Where my CA home is right now, while property tax is only 1%, there is another 1% from mello roos and every year there seems to be additional bonds added to it.

We bought another home in Henderson NV with plans of retiring there and while it is only slightly cheaper than our CA home, the property tax is a quarter of that of our CA home.


We don't pay Mello Roos so our total property tax is 1.12%. We have never paid it on any of the 7 homes we have owned in both Southern and Northern California. Actually the rate is considerably lower than 1% on the current value because of Prop 13.
 

WinniWoman

TUG Review Crew: Veteran
TUG Member
Joined
Jul 16, 2010
Messages
10,962
Reaction score
7,213
Points
749
Location
The Weirs, New Hampshire
Resorts Owned
Innseason Pollard Brook
I don't know what you pay, but from what we have seen, Vermont property/school taxes are half what they are in NY for the type of house/property we have. .

Of course the rates differ widely in NY as well as in VT. Just for kicks I looked up houses in Pine Bush on realtor.com, and there were several houses close to what my house is currently valued at. The property taxes on them were about $500 per year higher than what I pay in VT, so nowhere near twice as much.

I'm just pointing out that averages can be misleading - no offense intended.[/QUOTE]

None taken.

Oh, I know. For sure. For example, we pay almost $9000 per year in both school and property taxes. No services except snow plowing. Pine Bush is misleading because it encompasses three counties with the common denominator being the school district. I live in Sullivan county; others in Orange and others in Ulster. Some people in VT we have spoken to have much more land and so on and said they pay like $5000.

Others in nearby Orange County with a different school district are paying upwards of $20,000 per year! Yup! You read that right!

Crazy! VT and NY are such beautiful states with so much to offer. Too bad they are so expensive! It seems like a lot of the beautiful states, like even California, are very expensive.
 

Blues

TUG Review Crew
TUG Member
Joined
Jun 6, 2005
Messages
2,495
Reaction score
506
Points
473
Location
Monterey County CA
When someone tells me that he/she has pretty high retirement income, I normally ballpark it as $200K+ per year. At 200K, say 70K comes from SS for a couple, the rest are made up of pension (lucky devils)/IRA distribution/non IRA capital gains (taxed as income in CA), we are looking at 130K and at about 10% income tax in CA, it will be about 13K per year.

200K isn't pretty high, it's a very high retirement income. But taking it at face value, using your own numbers...

For 130K gross income (net of SS) for a married couple, after standard deduction and exemption credits, I get a total tax of $6147, using the latest rates published by the CA FTB (2014). Not a trivial amount, but not $13K either.

Bob
 

x3 skier

TUG Review Crew: Veteran
TUG Member
Joined
Apr 17, 2006
Messages
5,300
Reaction score
2,336
Points
649
Location
Ohio and Colorado
Resorts Owned
Steamboat Grand, The West,
Raintree and, formerly, The Allen House
I've never done a real in depth analysis but it seems to me, just about all the states have the same basic services that have to be paid with taxes from some place. If it's no income tax, there's got to be taxes on something else to pay for the services. Same thing if property taxes are low, there's something else to generate revenue to provide the services. Nirvana is retirement (pension, SS, ETC) is exempt from a high income tax, property taxes are low as are other taxes including personal property taxes. If such a place exists, it would probably be flooded with retirees and rapidly go broke.

On the subject of Social Security, I retired from one job at 55, started my own business and then waited till my FRA to start taking SS. Made the most sense to me and probably was a pretty good bet since I died last August and was revived with an AED. :D. The SS Checks were and are used for travel and other luxuries. If I had waited until 70 and not been revived when my heart stopped, I would have missed a lot of fun. :)

Cheers
 

winger

TUG Member
Joined
Oct 7, 2006
Messages
3,840
Reaction score
363
Points
468
Location
Northern California
That is not necessarily true. I have a pretty high retirement income and don't pay very much in California. I checked into moving to Texas and discovered that my taxes would be much higher because of their high property tax which far exceeded my state income tax here. Social Security is 100% exempt from California state income tax.
According to some studies, one key component of relocating at retirement would be who is at the 'destination'. Unfortunately, being first generation, we do not have family outside of California (all our relatives are either in San Fran or Los Angeles (LA) areas) so this could limit our out-of-state options. I don't really like LA, aside from visits to Newport Coast and/or Disneyland - that leaves our current San Fran area.

So, your statement of not paying very much taxes in California is interesting.
Is there something(s) you are doing specifically (out of the norm) to help curb taxes?
 

winger

TUG Member
Joined
Oct 7, 2006
Messages
3,840
Reaction score
363
Points
468
Location
Northern California
...

We bought another home in Henderson NV with plans of retiring there and while it is only slightly cheaper than our CA home, the property tax is a quarter of that of our CA home.
Have you looked at average electricity bills in Hnderson? I venture to guess due to heavy AC usage during 1/2 the year, you could be paying upwards of $300-400/mo certain months. Would that put a dent in your budget when compared to say somewhere with more moderate temperature here in Calif?
 
Top